Digex reports $23.7 million loss Beltsville company attributes deficit to setting up network

March 08, 1997|BY A SUN STAFF WRITER

Digex Inc., a Beltsville Internet service company, yesterday reported a $23.7 million net loss for 1996.

The company said the $3.68-per-share net loss stemmed from construction and other costs associated with its national Internet network and WorldWide Web site management system. In 1995, Digex lost $4.3 million, or 63 cents per share.

"Digex is well-positioned for 1997," said Christopher R. McCleary, the company's chairman and chief executive. "Our heavy investments in a world-class network, a state-of-the-art Web site management facility and superb customer support, have earned Digex a reputation as a high-quality, responsive, national Internet provider."

Digex has differentiated itself from other Internet service companies by catering exclusively to business customers. By the end of last year, Digex had secured more than 1,800 long-term contracts with companies such as Ernst & Young, Motorola and Lockheed Martin Corp.

Digex, which raised $45 million from an initial stock offering in October, also has business with the U.S. Securities & Exchange Commission, Internal Revenue Service and Federal Reserve Bank of Boston.

In the fourth quarter last year, Digex reported a net loss of $8.7 million, or 91 cents per share. The loss is more than three times the $2.4 million net loss it sustained in the comparable quarter a year ago. Fourth-quarter revenues, however, almost tripled to $5.9 million, compared to $2.1 million in the same quarter a year ago.

Digex nearly tripled its revenues for the year as well, ending 1996 with $15.6 million in that category. Assets also increased in 1996, rising to $56.7 million from $5.1 million as of Dec. 31, 1995.

Despite the negative earnings news, Digex's common stock price gained 37.5 cents to close at $10.75 per share yesterday on the Nasdaq exchange.